The BRIDGE Vol 1 2019 | Director's Corner with Larry Nickel
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Anxious Anticipation
While this is my first contribution to The BRIDGE, we have spoken before about the current state of the insurance industry and the challenges both insurers and brokers are facing. We continue to believe strongly in the health of this industry and all of its stakeholders and are anxiously watching to see if any changes come as a result of recent shifts in the political environment.
The situation we’ve seen over the past year in Alberta has been unprecedented. We have a severely underpriced auto product, and on average the industry is paying out $1.29 in claim and operating costs for every dollar collected. Insurers across the region have taken varying degrees of action to help address the problem, which has left many customers scrambling to find a new policy with another carrier. For companies, like ours, who have remained open for business, the influx of new customers has meant taking measures to manage the sudden growth. In the end, the customer has suffered. The situation is critical and change needs to happen.
While automobile insurance was not part of the newly elected United Conservative party’s platform, we are optimistic. All stakeholders need to come together and have a voice that speaks loud enough that government and regulators hear about the work that needs to be done. If systemic costs are properly addressed, if we have the regulatory ability to innovate and adapt, and if we all practice strong corporate management - a healthy, competitive market will emerge, and we will start to see the tail end of this challenging cycle.
All over the country we are seeing auto insurance reviews and talk of reform as part of political platforms. We are keeping involved in collaboration with the Insurance Bureau of Canada and I was pleased to see the recent study that IBAC commissioned with Deloitte, which showed the importance of Property and Casualty Insurance on the Canadian economy. Here are a few key points from the study:
- The industry employees 126,000 people and generates a net written premium of $47Billion
- It is estimated that annually Brokers contribute over $5 billion to Gross Domestic Product and $484 million to government taxes
- Brokers employ over 58,000 people and pay over $3 billion in income
These are numbers that cannot be ignored by government. Strong insurance carriers and a healthy Broker network are key drivers and enablers of a strong economy. I am thrilled to be a part of this ecosystem and anxious to see what changes that may come in the ever-evolving landscape of our business.